General Economics 2 Set 1

Bachelor of Arts in Political Science (BA Political Science),

Union Public Service Commission (UPSC),

Indian Administrative Service (IAS)

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This set of General Economics 2 Multiple Choice Questions & Answers (MCQs) focuses on General Economics 2 Set 1

Q1 | Trade as an engine of growth was propounded by :
  • Hirschman
  • Nurkse
  • Marshall
  • Robinson
Answer: Nurkse
Q2 | A decrease in the domestic currency price of foreign currency is:
  • Depreciation
  • Appreciation
  • Euro currency
  • Hedging
Answer: Appreciation
Q3 | Normal rate quoted in foreign exchange market is:
  • Arbitrage
  • Balance of trade
  • Exchange rate
  • Price rate
Answer: Exchange rate
Q4 | Balance of payment consist of:
  • Trade in visible
  • Trade in invisibles
  • International capital flows
  • All of the above
Answer: All of the above
Q5 | Invisible item are the part of ‐‐‐‐‐‐ account of balance of payment.
  • Current
  • Capital
  • Merchandise
  • None of the above
Answer: Current
Q6 | Devaluation of currency may result in:
  • Increase in export
  • Increase in import
  • Increased capital flow
  • Capital outflow
Answer: Increase in export
Q7 | Balance of payment take in to account:
  • Visible items
  • Invisible items
  • Both visible and invisible item
  • None of the above
Answer: Both visible and invisible item
Q8 | A fall in the price of Rupee in terms of foreign exchange is termed as:
  • Depreciation
  • Appreciation
  • Devaluation
  • Revaluation
Answer: Depreciation
Q9 | Transaction in travel, transportation and insurance between countries is included under:
  • Merchandise
  • Official reserves
  • Invisibles
  • None of the above
Answer: Invisibles
Q10 | Which of the following transaction is debit in balance of payment;
  • Export of merchandise
  • Export of service
  • Gift from foreigners
  • Gift to foreigners
Answer: Gift to foreigners
Q11 | Which is the component of capital account of balance of payment:
  • Service payments
  • Portfolio investment
  • Export
  • Interest receipts
Answer: Portfolio investment
Q12 | Under fixed exchange rate system, when domestic currency is moved to a higher parity in terms of vehicle currency is:
  • Appreciation
  • Depreciation
  • Devaluation
  • Revaluation
Answer: Revaluation
Q13 | Which one of the following is correct when there is under valuation of domestic currency:
  • Encouraging exports and inflow of capital
  • Foreign goods cheaper and exports dearer
  • Country imports more and exports less
  • There is outflow of capital
Answer: Encouraging exports and inflow of capital
Q14 | In balance of payment , if current account registers a deficit, the capital and financial account must register a:
  • Deficit
  • Balance
  • Surplus
  • Capital outflow
Answer: Surplus
Q15 | In all balance of payment accounts, there are a fictitious head of account called:
  • Invisibles
  • Deficits
  • Reserves
  • Errors and omissions
Answer: Errors and omissions
Q16 | Balance on merchandise and service trade is called:
  • Balance of payment
  • Trade balance
  • Current account
  • Balance on goods and services
Answer: Current account
Q17 | When demand for US dollars increases under flexible exchange rate system, then:
  • The rupee depreciates
  • The dollar appreciates
  • Both A and B
  • None of the above
Answer: Both A and B
Q18 | An economic transaction is entered in the balance of payment as a credit, if it leads to:
  • Receipt of payment from foreigners
  • Either the receipt of payment or making of payment
  • A payment to foreigners
  • Neither the receipt nor making of a payment
Answer: Receipt of payment from foreigners
Q19 | Remittances foe abroad is included in which account of balance of payment:
  • Current account
  • Capital account
  • Visible account
  • Official account
Answer: Current account
Q20 | Assertion (A) : Devaluation in general is resorted to increase the exports. Reason (R) : It makes exports cheaper.
  • Both (A) and (R) are correct
  • (A) is correct, but (R) is not correct.
  • Both (A) and (R) are incorrect
  • A) is incorrect, but (R) is correct
Answer: Both (A) and (R) are correct
Q21 | The continuous deficit in the balance of payments of India is due to
  • Continued rise in imports
  • Slow rise in exports
  • Exchange rate volatility
  • All of the above
Answer: All of the above
Q22 | The ongoing weakening of Rupee against Dollar will cause
  • Indian exports to US will rise
  • Indian exports to US will fall
  • Import from US to India will remain constant
  • Indian exports to US remain constant
Answer: Indian exports to US will rise
Q23 | If the Rupees per Dollar($) exchange rate changes from Rs 44 to 46 in an year by the market force, it implies
  • Appreciation of $
  • Depreciation of $
  • Devaluation of $
  • Revaluation of $
Answer: Appreciation of $
Q24 | Public finance is said to be:
  • Science of income and expenditure
  • Science of money and cost
  • Science of demand and supply of money.
  • Science of taxes and spending.
Answer: Science of income and expenditure
Q25 | All the accounts of public authority are subject to:
  • Conceal
  • Audit and inspection
  • Publicity
  • None of above.
Answer: Audit and inspection
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